Business | Economy

Gulf states 'must target' high inflation

Gulf governments have been urged to make inflation a core target of their monetary policy - a move that could bring into question the continued pegging of currencies to the dollar.

  • Staff Report
  • Published: 00:41 March 18, 2008
  • Gulf News

Dubai: Gulf governments have been urged to make inflation a core target of their monetary policy - a move that could bring into question the continued pegging of currencies to the dollar.

In spite of positive indications that Middle East markets are avoiding the effects of a global slowdown, "there is uncertainty in the markets that needs to be addressed," said Christian Mouchbahani, Middle East and North Africa CEO of investment bank and institutional securities firm Jefferies.

"Inflation needs to be tackled and it is not clear that channelling liquidity into real estate and stock markets will be enough," Mouchbahani said at the 3rd Middle East IPO Summit at the Intercontinental Hotel, Abu Dhabi.

By pegging their currencies to the dollar, most Gulf governments have, in effect, delegated monetary policy to the US Federal Reserve, Mouchbahani added.

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